Shorter, milder than past two downturns

Canada has escaped the global recession relatively unscathed, concludes a study by Statistics Canada released Thursday.

In much of the industrialized world, the downturn has been called the Great Recession.

While Canadian exports were hit hard by the recession, consumer spending, home buying and employment held up better than in past downturns, says one economist.

The U.S., for example, suffered its worst slump since the Great Depression, with a six per cent drop in gross domestic product from late 2008 to early 2009.

Statistics Canada said Canada did suffer through a technical recession — a 3.3 per cent drop in GDP over three quarters between the fall of 2008 and the summer of 2009.

But that was shorter and milder than Canada's previous two recessions. The downturn in 1981 and 1982 saw GDP fall 4.9 per cent over six quarters while the 1991-92 slump resulted in a 3.4 per cent drop over four quarters.

Employment fell just 1.8 per cent in the recent recession, compared with 3.2 per cent in 1991-92 and five per cent in 1981-82.

The most recent downturn "didn't have as broad a reach" across industries as the two before, says Beata Caranci, director of economic forecasting with TD Economics.

"The export sector was hit much harder in this recession," she said. "But outside of that, if you look at consumer spending behaviour, residential investment behaviour and even on the employment side, that held up considerably better."

Unlike many other countries, she said, Canada was not affected by the financial crisis and the drop in the value of mortgage-backed securities and the resulting tightness in lending to households and businesses.

"That did not occur here in Canada," Caranci said. "We continued to have growth in credit, and it's one of the key catalysts for our rebound in the housing market," she said.